What document must an insurance company obtain to legally transact business?

An insurance company must obtain a Certificate of Authority to legally transact business. This certificate is a crucial document issued by a state insurance regulator that grants the insurer permission to operate within that state. It demonstrates that the company meets all necessary regulatory requirements, including financial stability, compliance with state laws, and adherence to ethical standards. Without this certification, an insurance company cannot legally sell insurance products, issue policies, or engage in other insurance-related activities within that jurisdiction.

While an insurance policy is essential for providing coverage to clients, and an insurance license may refer to specific licenses held by agents or brokers, the Certificate of Authority specifically pertains to the company's capacity to conduct business legally. Regulatory approval might also be necessary in some contexts, but it usually ties into the process of obtaining the Certificate of Authority.